Wells Fargo Class Action Claims Company Discriminates Against Black Home Mortgage Applicants

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Wells Fargo Class Action Black Applicants Home Mortgages Discrimination Class Action Overview:

• Who: Black mortgage refinancing applicants are suing Wells Fargo for racial discrimination that cost Black Americans potentially billions of dollars in the past few years.
• Why: The applicants allege that Wells Fargo disproportionately denied refinance or home mortgage applications of Black applicants during a period of historically low interest rates.
• Where: The lawsuit was filed in a California federal court.

Wells Fargo owes Black Americans potentially billions of dollars in damages for systemic racism that denied or delayed refinancing to Black home mortgage applicants in the past few years while interest rates were at record lows, a new class action lawsuit alleges.

Plaintiffs Aaron Braxton, Gia Gray, Bryan Brown and Paul Martin, all Black homeowners, filed the class action lawsuit April 12 in a California federal court, alleging violations of state and federal race discrimination laws.

The lawsuit was filed just one month after a bombshell report from Bloomberg revealed Wells Fargo denied more than half of Black homeowners mortgage refinancing in 2020 while approving 72% of white applicants. 

Now, homeowners are seeking compensation for the allegedly racist lending practices.

No Other Bank Rejected Black Applicants at Rate of Wells Fargo, Plaintiffs’ Attorney Says

Over the past few years, historically low interest rates created an unprecedented opportunity for homeowners to refinance their home mortgages and reduce monthly payments, attorney for the plaintiffs Trent Copeland, a Partner at Ellis George Cipollone O’Brien Annaguey LLP, told Top Class Actions.  

Millions of homeowners across the nation sought to reduce their payments through refinancing and were approved for life-changing new loans.

However, Wells Fargo denied the applications of over 50% of the Black Americans seeking to refinance in 2020 and denied the applications of just under 50% of the Black Americans seeking to refinance in 2021.

“While white Americans were scrambling to refinance their homes or buy their first homes, many African Americans and people of color were being systematically and institutionally shut out as a result of these limiting practices,” Copeland said.

Data from 8 million refinancing applications from 2020 revealed the highest-income Black applicants had an approval rate about the same as white borrowers in the lowest-income bracket, the lawsuit says.

“There was no other bank that rejected African American applicants at the astonishing, stunning rate that Wells Fargo did,” Copeland said. “They were acutely aware of this. And they were also aware that the algorithm that they used to promote this pernicious behavior had a role in it.” 

Wells Fargo Used Racially Biased Refinancing Algorithm, Class Action Says

Wells Fargo’s discriminatory treatment of Black applicants was tied to its decision to use racially-biased algorithms in its refinancing process, the lawsuit states.

According to confidential informants, the onset of the COVID-19 pandemic led Wells Fargo to let go of internal fair lending checks and implement an automated underwriting system, the lawsuit alleges.

However, the algorithmic underwriting platforms were “stuffed chock-full of” Wells Fargo-generated race and demographic data that served no legitimate underwriting basis but to signal for race discrimination in the bank’s residential refinance decisions, the lawsuit states.

Tens of thousands of people were victimized by Wells Fargo’s intentional and systematic race discrimination, causing millions — and perhaps even billions — of dollars in damages to the class, the lawsuit states.

“Today there is a nearly eight times difference between the median white household income and that of median Black household income,” Copeland said. “It is these kinds of systemic racism in lending institutions like Wells Fargo that directly contribute to the wealth gap that exists between white and Black America.” 

Plaintiffs Had Excellent Credit Histories, According to Class Action 

Plaintiff Aaron Braxton is an award-winning Black playwright who had a mortgage with Wells Fargo for two decades and always paid on time, he says. 

Yet it took the bank over nine months to agree to refinance Braxton’s mortgage in 2020, and, when it did, it gave him an above-market interest rate of around 4%, the lawsuit states.

Plaintiff Paul Martin, a Black Hollywood entertainment executive at Sony Pictures for 14 years, sought to refinance his multi-million dollar home in 2020. 

But Wells Fargo refused to refinance Martin’s loan unless he could get it appraised for $2 million. Wells Fargo’s appraiser refused to come inside Martin’s home, which is in a Black neighborhood, and appraised it at just shy of $2 million, the lawsuit states. 

“Mr. Martin went to another lender, who appraised the home at $2.4 million and promptly refinanced his loan,” according to the class action lawsuit.

Wells Fargo Has History of Discrimination

This is not the first time Wells Fargo has been sued for racial discrimination. 

In 2012, Wells Fargo agreed to pay $184 million to settle claims with the Department of Justice that the bank pushed Black and Hispanic homeowners to obtain subprime mortgages and then charged them higher fees and interest rates.

In 2019, Wells Fargo settled a lawsuit with the City of Philadelphia over allegations it purposefully made it difficult for minorities to refinance their mortgages.

And in August 2020, the company entered into a conciliation agreement with the U.S. Department of Labor and paid $7.8 million over allegations of racist hiring practices.

Plaintiffs Seek To Represent Nationwide Class of Black Homeowners 

The plaintiffs are seeking to represent a nationwide class of Black homeowners who had their mortgage refinancing application denied or delayed or approved at a higher interest rate than white counterparts since 2018.

They’re suing for race discrimination in violation of the Fair Housing Act, Title 42, the Unruh Civil Rights Act and California state laws.

The plaintiffs are seeking certification of the class action lawsuit, restitution, compensation and punitive damages in the millions (or even billions), an injunction to prevent Wells Fargo from continuing with the alleged discriminatory practices, fees, costs and a jury trial.

If you are a Black, Latino or other racial minority homeowner whose refinance application was denied by the bank between 2019 and 2021, you may qualify to participate in this Wells Fargo Refinance Discrimination lawsuit investigation. Click here for more information (links to paid attorney content).

The plaintiffs are represented by Ellis George Cipollone O’brien Annaguey LLP and Frank, Sims & Stolper LLP.

The Wells Fargo Racist Lending Class Action Lawsuit is Aaron Braxton et al., v. Wells Fargo Bank, N.A., et al. Case No. 4:22-cv-01748-KAW, in the U.S. District Court Northern District of California

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